WestRock (Richmond, Va., USA), a producer and global supplier of pulp and primarily paperboard containers as well as corrugated boxes for packaging, announced this past week the company would settle $2.5 billion in pension obligations of the WestRock Co. Consolidated Pension Plan ("Plan"). This transaction, which is expected to close later in the month and is currently subject to closing conditions, will occur through the purchase of a group annuity contract using Plan assets that will transfer payment responsibility for retirement benefits owed to approximately 35,000 U.S. retirees and their beneficiaries to The Prudential Insurance Co. of America, a subsidiary of Prudential Financial Inc. (Newark, N.J.).

 

This settlement will reduce WestRock’s overall U.S. pension obligations by approximately 40%. The monthly retirement benefit payment amounts currently received by retirees and their beneficiaries are not changing. Those Plan participants not included in the transaction are staying in the Plan.

"WestRock is committed to the long-term financial health of the Plan and has taken steps to protect all participants of the Plan," said Ward Dickson, CFO, WestRock. "This transaction represents a further step towards managing future pension cost and risk, benefiting participants remaining in the Plan while entrusting certain retirees’ and their beneficiaries’ pensions to a financially strong and secure institution with expertise in the long-term management of retirement benefits."

After the annuity purchase, the Plan is expected by the company to remain in a strong, overfunded financial position. WestRock will not make any cash contributions into the Plan to affect this transaction and, at this time, said it does not expect to make any future cash contributions. Additionally, WestRock does not expect any unfavorable impact to its fiscal 2017 pension income as a result of this transaction.